Bluenergy Group Limited v Epoch Holdings Pty Limited

Judgment 1In light of the exigencies of the matter, I shall adopt the unusual course of making my orders, and providing my reasons therefore immediately afterwards. Orders 2Upon the plaintiff, by its counsel, giving the usual undertaking as to damages, I make the following orders: (1)The first, second and third defendants, by themselves, their servants and agents, be restrained pending final determination of these proceedings, from exercising a lien over any goods, stock, products, stock orders and stock requests ("plaintiff's goods") belonging to the plaintiff and currently within the defendants' possession or likely to come within the defendants' possession. (2)The first, second and third defendants, by themselves, their servants and agents, be restrained from selling, transferring, parting with possession or otherwise dealing with the goods as identified in annexure "M" of Mr Andrew Howard's affidavit, affirmed 3 March 2014, until further order of the Court. (3)Time for service of the Summons, the affidavit of Mr Howard sworn 3 March 2014 and a copy of the Court's orders be abridged to 5:00pm 4 March 2014. (4)Matter to return to the Registrar's List on Tuesday 11 March 2014. (5)All parties to have liberty to restore the matter to the list on 48 hours' notice. (6)Costs of today reserved. 3Yesterday my Associate became aware of the fact that an urgent application for an ex parte injunction, restraining the holding of an auction of certain goods at 10 this morning, may be placed before me as Duty Judge. Rather than dealing with the matter today, counsel for the plaintiff agreed with my proposition that it was essential that the matter be heard yesterday evening. That occurred, and I reserved my decision until today. 4The matter was indeed heard ex parte, in the sense that no opponent was present in court at the time of the hearing. However, it was not ex parte in the sense that no notice had been given to the three defendants that the hearing was to take place. 5To the contrary, I have been informed that, after the matter was first mentioned, a solicitor in the employ of the solicitors for the plaintiff contacted the solicitor for the first defendant, and informed him that the application was to be made that evening. In other words, the legal representatives of the first defendant were aware of the matter but (and I make no criticism of the fact in the circumstances) not in attendance. 6The second defendant is closely associated with the first defendant, and in the circumstances no contact was made with him personally. 7Contact was made with the third defendant, which is the auction house, and the solicitor acting for the plaintiff was informed in effect that the third defendant would abide by any order of the Court. 8In those circumstances of notice, albeit late and informal notice, having been given, I was prepared to hear the matter ex parte. 9Evidence was placed before me by way of an affidavit of Mr Andrew Howard of 3 March 2014. Mr Howard is the Managing Director of the plaintiff. A lengthy exhibit to that affidavit was also read in support of the application. Assisted by the summary of that evidence provided by counsel for the plaintiff by way of submissions, my understanding of the background is as follows. Factual background 10The plaintiff is a company that leased a factory in the Sydney suburb of Smithfield for commercial purposes from the first defendant (or rather, it seems that that transaction took place between associated commercial entities of the plaintiff and of the first defendant). The second defendant is, as I have said, closely associated with the first defendant. The second defendant also had a close association with the plaintiff. Things soured, and eventually a dispute developed between the first defendant and the plaintiff with regard to the leased premises. The first defendant commenced proceedings in this Court seeking, in short, vacant possession and claimed rental arrears in the sum of approximately $1 million. The plaintiff was prepared, I am told, to provide vacant possession, but the dispute remains on foot with regard to the alleged arrears. However, the position of the plaintiff is that it was unable to remove all of its goods and chattels from the leased premises because the locks had been changed, and after that complete access was never provided to it in order to permit it to remove its goods. 11Meanwhile, there is apparently a second dispute between the first defendant and the plaintiff (or associated entities) also proceeding in this Court. I was not taken to the details of that separate dispute. 12It is said on behalf of the plaintiff that the goods that remained at the leased premises are worth in the vicinity of $4 million. 13Last Wednesday, the Managing Director of the plaintiff fortuitously became aware that an auction was being advertised for today, the following Tuesday, with regard to the goods of the plaintiff that had remained at the premises. On that Wednesday, he was travelling overseas, and upon his return to Australia on the Saturday he commenced to seek legal advice with respect to, in short, stopping the auction. For reasons that are, with respect, quite unexplained, he did nothing whilst overseas to advance that cause, even though he was in a part of the world notorious for its technological advancement with regard to telephones, e-mails, the Internet, and so forth. 14The advertisement with regard to the auction speaks of a "landlord's lien". And yet counsel for the plaintiff submits that it is hotly disputed whether, in truth, any money is owed at all by the plaintiff to the second defendant. Even if that be the case, he submits, there is a real question as to whether or not the value of the goods to be auctioned very substantially outstrips the amount of any debt. Finally, he submits that, whatever may be the case by way of legal principle in general or construction of clause 15.1(b) of the lease in particular, with regard to items left at the leased premises, it could hardly be the case that a tenant who is bona fide unable to remove its goods can have them seized and sold if it was the landlord that placed the tenant in that position. 15In short counsel for the plaintiff submits that it is appropriate to restrain the auction that is to proceed in less than an hour. It is accepted that the matter should come back before this Court very promptly. It is also accepted that any party should have liberty to restore the matter to the list on extremely short notice. Legal principles 16I turn to discuss the applicable legal principles. The purpose of an interlocutory injunction is to preserve the status quo, specifically the legal and equitable rights of the parties, pending a final determination of their rights. 17The High Court of Australia has laid out the principles that govern the grant of an interlocutory injunction: see Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618; Australian Broadcasting Corporation v O'Neill [2006] HCA 46; 227 CLR 57. Stated succinctly, the court must determine whether preserving the status quo is justified on the basis of a number of factors. 18The first is the probability of the ultimate success of the plaintiff's case. The plaintiff must demonstrate the existence of a serious question to be tried and a prima facie case; a sufficient likelihood of success is adequate: Australian Broadcasting Corporation v O'Neill. 19The second is the balance of convenience, considering in particular the relative hardships that would be visited upon the parties and upon any third parties by the granting of an injunction. 20The third and final factor is the adequacy of damages as an alternative remedy to an injunction. 21In short, the court must consider the nature of the rights asserted by the parties, and the practical consequences likely to flow from the interlocutory order sought. 22It is well established that when an application for an interlocutory injunction is made ex parte, the plaintiff must make full and frank disclosure of all material facts relevant to the determination of whether an injunction should be granted, including any facts that may be disadvantageous to the application: Thomas A Edison Limited v Bullock (1912) 15 CLR 679; Shoalhaven City Council v Bridgewater Investments Pty Ltd [2010] NSWLEC 103. 23In his judgement in International Finance Trust Company Ltd v NSW Crime Commission [2009] HCA 49; 240 CLR 319, Heydon J considered the nature and process of ex parte applications for interlocutory injunctions as an example of the centrality of hearings to the judicial process. His Honour noted that as a general rule an injunction will only be granted ex parte if it is granted either for a very short period of time, during which the defendant is notified of its existence and may therefore oppose any extension of it, or if it is granted until further order, but with liberty granted to the defendant to make speedy application for it to be set aside. 24His Honour went on to express the view (citing the Privy Council's decision in National Commercial Bank Jamaica Ltd v Olint Corporation Ltd [2009] 1 WLR 1405 at 1408) that a court should not proceed on an ex parte application for an injunction where notice has not been given to the defendant except in circumstances where giving notice would enable the defendant to take steps to defeat the purposes of the application, or there has been literally no time (although this would occur very rarely - it is difficult to imagine circumstances in which it is not possible to make a telephone call). As I have said, in this case notice, although late and rudimentary, has indeed been given. Determination 25I turn to apply those principles to the evidence placed before me, and to provide my determination. Applying those principles to my determination of whether to grant this discretionary remedy, I think that, on the material with which I have been provided, it can be said that there is a prima facie case with regard to a serious question to be tried. As I apprehend it, there is a real dispute about the right of the first defendant to sell the goods of the plaintiff, whether by way of a landlord's lien or any other legal right. 26I also consider that the balance of convenience favours restraining the auction, for no more than a week, before the matter comes back before this Court, rather than permitting it to proceed this morning. In saying that, I have taken into account the interests of perhaps many third parties, who have, I infer, expended time and money on preparing to bid at the auction. 27The question of the adequacy of damages has given me serious pause. I queried counsel for the plaintiff as to why it is not the case that, if the goods are wrongfully sold, the plaintiff could not sue the first defendant and second defendant for resultant loss, both direct and indirect. Counsel for the plaintiff relied upon the evidence and explained to me that the loss of the goods could affect sundry commercial negotiations in which the plaintiff is involved, and that furthermore the value of the goods, if sold, and any adverse effect of any such sale on those negotiations, could be very hard to quantify. With some reticence, I have come to accept that damages may be an inconvenient and even inadequate remedy. 28An undertaking as to damages is proposed to be given by the plaintiff in support of this injunction. I must say that the material before me with regard to the assets of that company was rather opaque. In other words, there is a question in my mind with regard to the true financial value of any such undertaking. Furthermore, it is noteworthy that, when I explored the issue with counsel for the plaintiff, I was informed that the Managing Director of the plaintiff is, for sundry reasons, not in a position to provide a personal undertaking as to damages. Nevertheless, it is proposed that there be an undertaking as to damages given by a commercial entity that, at least on what I have been told of the value of the goods involved, seems to be substantial. 29Finally, with regard to discretionary factors, I have already noted that two days passed at a crucial time when nothing was done to protect what are now said to be vital interests of the plaintiff worthy of an injunction. The result was, with respect, that the proceedings were conducted in a highly inconvenient way. Not only that, if the auction is to be restrained at this stage, it will literally be at the last hour. 30That discretionary consideration, and the other concerns that I have expressed with regard to other factors, has led to the matter being very finely balanced in my mind. However, having taken time for reflection, I have come to the view that the balance of convenience favours restraining the auction today. As I have said, I consider it imperative that the matter come back before this Court one week from today, and that all parties have liberty to restore the matter to the list on 48 hours' notice. 31It is for these reasons that I made the orders that, for convenience, I announced at the commencement of this judgment.